Non-compete clauses will soon be banned in most employment contracts, thanks to a new rule that the Federal Trade Commission issued on April 23. Although the final rule affects almost every employer in the country, there are some exceptions, which you must know to stay compliant.
Check out a few key facts about how the ban on non-compete agreements may impact healthcare practices.
Healthcare Firms Need to Identify Affected Staff
The non-compete ban includes several exclusions, which means that certain employees may still be subject to non-competes. For instance, non-profit organizations are not subject to the ban, nor are existing “senior executives,” which is a person in a “policy-making position” who earns more than $151,164 a year. These staffers may still be subject to non-competes.
To determine which of your staff members are affected by it, you should consider consulting a healthcare attorney.
Practices Must Alert Existing Employees
If you previously included non-compete language in the employment contracts of your current employees, you must notify them that they will no longer be bound by that non-compete once the new ban takes effect.
Although the government hasn’t yet set a firm date on when the law will go into effect, it’s expected to hit 120 days after the rule is published in the Federal Register. For that reason, many analysts believe the ban will go into effect before the end of the summer this year. This gives you just a few months to alert all existing staff members that their existing non-compete agreements are no longer enforceable.
Healthcare Entities Need to Adjust New Employment Contracts
The American Medical Association estimates that up to half of physicians are subject to non-competes currently — and that means most practices must immediately adjust their new employment contracts to eliminate non-compete language from them.
If you’re wondering how you can protect your practice’s confidentiality without using a non-compete, the good news is that you may still use other verbiage, such as language barring employees from repeating your trade secrets. This may also be a good time to look over your entire contract to ensure you don’t have any other language in it that may have become non-compliant since you created the documents.
For instance, some employers still include contract terms forbidding employees from discussing salary with one another, even though the National Labor Relations Board said several years ago that employees have the right to discuss this topic.
It’s a good idea to meet with a healthcare attorney or an HR consulting firm to create new employment contracts that are legally compliant and that still protect your practice.
There’s so much more to know about how the new ban on non-competes will affect healthcare providers. Let attorney Kelly Holden, JD, walk you through the changes during her online training, Comply With New FTC Employee Non-Compete Ban to Avoid Penalties. Register today!
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